Are you looking for a stock that has consistently beat earnings estimates and may be well-positioned to keep this trend alive in its next quarterly report? Barrick gold (GOLD – Free Report), which belongs to the Zacks Mining – Gold industry, could be a great candidate to consider.
This gold and copper mining company has an established track record of exceeding earnings expectations, especially looking at its previous two reports. The company boasts an average surprise over the past two quarters of 20.91%.
For the last reported quarter, Barrick Gold came out with earnings of $0.32 per share versus the Zacks Consensus Estimate of $0.26 per share, representing a surprise of 23.08%. For the previous quarter, the company was expected to post earnings of $0.16 per share when it actually produced earnings of $0.19 per share, delivering a surprise of 18.75%.
For Barrick Gold, estimates have gone up, thanks in part to these surprising earnings numbers. And looking at the stock’s positive Zacks Earnings ESP (Expected Surprise Prediction) is a good indicator of future earnings growth, especially when combined with its solid Zacks Rank.
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise nearly 70% of the time. In other words, if you have ten stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.
The Zacks Earnings ESP compares the most accurate estimate to the Zacks Consensus Estimate for the quarter; the most accurate estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts who revise their estimates just before earnings releases have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had previously predicted.
Barrick Gold currently has an Earnings ESP of +1.45%, suggesting that analysts have become optimistic about its near-term earnings potential. When you combine this positive Earnings ESP with the stock’s Zacks Rank #2 (Buy), it shows that a new run may be on the way.
However, investors should note that a negative Earnings ESP value is not indicative of an earnings loss, but a negative value does reduce the predictive power of this measure.
Many companies end up beating the consensus earnings per share estimate, but that may not be the only reason their shares rise. On the other hand, some stocks may hold up even if they ultimately miss the consensus estimate.
Therefore, it is very important to check a company’s Earnings ESP before its quarterly release to increase the chances of success. Make sure you use our Earnings ESP filter to discover the best stocks to buy or sell before they report.